Dubai needs to put housing at the centre of land use plans and provide incentives to developers, such as inclusionary zoning, land subsidies and tax breaks, to boost affordable supply, according to a senior advisor to the emirate's Real Estate Regulatory Agency (RERA).
In an article written for the World Economic Forum, Mahmoud Hesham El Burai, aso chairman of the Middle East Sustainable Development Institute, said the city needs to reconsider its supply-led demand approach, which focuses on attracting international buyers, who are mainly speculators.
El Burai said currently the private sector does not have the tools or interest to develop affordable housing.
"On the contrary, high margins in the luxury market have encouraged high-end developments. Solving land supply in the right locations is the most important step in bridging the affordability gap. Dubai’s top-down planning model needs to readjust itself, and create a masterplan or long-term land usage plan to influence affordable housing, as Singapore did," he said in the article
He cited several successful international schemes to boost affordable housing demand, such as the UK’s Shared Ownership Plus, and Australia’s Keystart and Homestart financing programmes, which aim to lower interest rates, down payments and transfer fees.
El Burai noted that a lack of affordable housing in Dubai is a key barrier to the city achieving its sustainable development objectives and happiness agenda, as well as its vision of being a smart city.
When Dubai opened up its real estate market in 2002 and allowed foreign ownership, it attracted investors from more than 200 nationalities.
But El Burai said that with a growing middle class and the demand for a more stable property market, Dubai needs a consolidated and multi-stakeholder strategy for affordability.
He said one of the major causes of Dubai's affordability problem is its domination by speculators. Between 2003 and 2015, adding that they drove up apartment prices by 300 percent and villa prices by 500 percent, rendering homeownership difficult.
Research by real estate firm JLL suggests only 20 percent of all stock are affordable, although the demand for the affordable sector comprises 40 percent of all demand, with homeownership at just 30 percent.
El Burai concluded: "The solution is a multi-stakeholder approach that integrates affordable supply and enablers of demand, while going beyond economic sustainability to ensure social development and environmental management. Dubai’s government must develop a long-term land usage plan and integrate its urban planning functions, placing housing for all at the centre."For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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